Respuesta :
the main reason formal institutions limit alliances and acquisitions in the areas of formal market entry modes because Many governments discourage acquisitions in order to establish local-only subsidiaries.
Through a strategic collaboration with a local partner, there are other ways to break into a new market. A strategic alliance is a legal arrangement between two or more businesses that specifies how and when the parties will work together to accomplish a certain goal. However the government is not in favor of these alliances as it hampers the growth of the local business.
Buying another company's stock, trading it for its own, or, in the case of a private company, paying the owners a purchase price allows one company to take control of another. This transaction is known as an acquisition. The government forbids this type of transaction as well as it gives the foreign company to regulate the local body which again prevents them from being the sole decision maker.
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